Invest in Inexpensive, Growing Stocks the Easy Way

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you're attracted to large-cap companies that are consistent earners, have high returns on equity, and are the kinds of companies that growth-at-a-reasonable-price investors would seek out, the new Russell Growth at a Reasonable Price ETF (Nasdaq: GRPC  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Russell ETF's expense ratio -- its annual fee -- is a low 0.37%.

This ETF doesn't have much of a performance to assess yet, as it's less than a year old. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

What's in it?
The ETF has selected some stocks that have performed well over the past year. Boeing (NYSE: BA  ) advanced about 11%, with its much-delayed Dreamliner finally debuting. Meanwhile, it also has a big backlog of orders for its 737, and has won some big contracts, such as a $20 billion one from the Air Force.

Other companies haven't done as well lately but could rebound in the future. General Electric (NYSE: GE  ) gained just 5%, but its management was confident enough in its future to up its dividend by 13% recently. Burned by its commercial lending business, it's shifting away from that, and has been expanding into businesses such as oil and gas equipment.

Construction and mining equipment giant Caterpillar (NYSE: CAT  ) , up 10%, is enjoying strong demand and buying mining equipment maker Bucyrus for nearly $9 billion. The company is also building plants in India and China, positioning itself for growth there.

Networking titan Cisco (Nasdaq: CSCO  ) sank by about 8% as it retooled itself a bit, killing off less-profitable and less-promising businesses such as its Flip video recorders. Investors are still waiting and watching, though, as its expected revenue growth rate has been falling.

The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 stocks for your retirement portfolio.

Longtime Fool contributor Selena Maranjian doesn't own shares of the companies mentioned. The Motley Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1758008, ~/Articles/ArticleHandler.aspx, 9/30/2014 12:39:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement